SELIGMAN FINANCIAL SERVICES, INC.
AN AFFILIATE OF
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 PARK AVENUE, NEW YORK, NY 10017
THIS REPORT IS INTENDED ONLY FOR THE INFORMATION OF SHAREHOLDERS OR THOSE WHO
HAVE RECEIVED THE OFFERING PROSPECTUS COVERING SHARES OF CAPITAL STOCK OF
SELIGMAN COMMON STOCK FUND, INC., WHICH CONTAINS INFORMATION ABOUT THE SALES
CHARGES, MANAGEMENT FEE, AND OTHER COSTS. PLEASE READ THE PROSPECTUS CAREFULLY
BEFORE INVESTING OR SENDING MONEY.
EQCS3c 9/96
- --------------------------------------------------------------------------------
THIRD QUARTER REPORT
- --------------------------------------------------------------------------------
SELIGMAN
COMMON STOCK
FUND, INC.
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1996
[LOGO]
- --------------------------------------------------------------------------------
A GROWTH AND INCOME FUND
ESTABLISHED IN 1930
<PAGE>
================================================================================
TO THE SHAREHOLDERS
- --------------------------------------------------------------------------------
Seligman Common Stock Fund had a modest third quarter. As a result, the Fund
continued to lag the Standard & Poor's 500 Composite Stock Price Index for the
three and nine months ended September 30, 1996. Specific performance information
and a discussion with your Portfolio Manager about the past three months begin
on page 2.
In the third quarter of 1996, the economy continued to grow at a healthy
pace with virtually no inflationary repercussions and no action from the Federal
Reserve Board to alter interest rates. Reports issued in September reflected the
economy's health, showing improvement in production, new home sales, wages, and
spending.
With the lowest unemployment rate since June 1990, strong personal incomes,
interest rates far below their 1980s levels, and few signs of inflationary
pressure, consumer confidence as measured by The Conference Board rose 25% above
its January 1996 level.
Despite the Fed's unchanging position on interest rates in the third
quarter, the apprehension surrounding each Fed meeting continued to have a
significant influence on the financial markets. In the equity markets, July was
marked by a correction, August by a recovery, and September by a series of
record-breaking highs. Continuing the year's trend, the bond markets rose or
fell with the release of each new economic report. Following the Fed's September
24 decision to maintain the current fed funds rate, the yield on the 30-year
Treasury bond declined modestly. For the remainder of the month, the yield
ranged from 6.89% to 6.98%, ending the quarter at 6.92%.
Going forward, we foresee continued, albeit moderate, economic growth and a
benign level of inflation. This environment of modest growth, combined with
relatively stable interest rates, should be beneficial for financial markets in
the months ahead. As always, there could be short-term volatility, but we remain
confident in the long-term outlook.
As we near the end of the year, we encourage you to review your overall
investment portfolio. When doing so, you may wish to consult your financial
advisor to discuss financial issues such as tax planning, and to ensure that you
are following the best investment strategy to help you seek your financial
goals.
We welcome Odette Galli as Co-Portfolio Manager of Seligman Common Stock
Fund, Inc. Ms. Galli has been with J. & W. Seligman & Co. Incorporated since
1993, has been a member of the Seligman Growth and Income Team since early 1995,
and has 15 years of investment experience.
We thank you for your continued interest in Seligman Common Stock Fund, and
look forward to serving your investment needs in the many years to come.
By order of the Board of Directors,
/s/William C. Morris
- --------------------
William C. Morris
Chairman
/s/Brian T. Zino
----------------
Brian T. Zino
President
October 30, 1996
IMPORTANT TELEPHONE NUMBERS
SHAREHOLDER
SERVICES
(800) 221-2450
RETIREMENT PLAN
SERVICES
(800) 445-1777
24-HOUR AUTOMATED
TELEPHONE ACCESS SERVICE
(800) 622-4597
1
<PAGE>
================================================================================
INTERVIEW WITH YOUR PORTFOLIO MANAGER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[PHOTO]
- --------------------------------------------------------------------------------
CHARLES C. SMITH, JR.
HOW DID SELIGMAN COMMON STOCK FUND PERFORM IN THE PAST THREE MONTHS?
Seligman Common Stock Fund modestly lagged the Standard & Poor's 500 Composite
Stock Price Index (S&P 500) in the third quarter of 1996 and for the nine months
ended September 30, 1996. However, we continued to maintain a very attractive
yield, significantly above the average yield of the Growth and Income Funds
universe as measured by Lipper Analytical Services, a prominent mutual fund
ranking service. Additionally, the Fund has increased its dividend in each of
the past 52 years for Shareholders who reinvest capital gains. It is the only
mutual fund that can boast such a record.
WHAT ECONOMIC FACTORS INFLUENCED THE FUND IN THE QUARTER?
Economic growth continued to spark fears of inflation and interest rate
increases in the third quarter of 1996. Strong employment data sent the equity
markets reeling in July, and interest rates spiked briefly but stabilized in
August and September as economic news started to indicate a slowdown. As fears
of an imminent Federal Reserve Board tightening subsided, the equity markets
regained strength to set new highs by the end of the third quarter, improving
the valuations of your Fund's holdings. Additionally, the fact that most
corporate profit reports either met or exceeded Wall Street's expectations
fueled the equity markets.
WHAT MARKET TRENDS AFFECTED THE FUND IN THE PAST THREE MONTHS?
The short-term investment mentality that took hold of market participants this
year continued in the third quarter, prompting exaggerated changes in the equity
markets with each new economic report. Large- and mid-cap growth companies
continued to be the pace setters within the equity markets. Large-cap stocks
with solid dividend histories captured the interest of investors concerned with
a possible slowdown in economic expansion. Growth stocks benefited from the
positive outlook for corporate profits and the diminishing probability of
inflation-related increases in interest rates. Due to the Fund's strategic
orientation toward value in its stock selection, it participated in the market's
appreciation to a lesser extent than did funds with more of a growth
orientation. The industry leaders in the portfolio, however, continued to do
well, rising in the wake of the July depreciation.
Abroad, the continued dominance of the US equity markets and the US dollar
made international gains seem lackluster and dampened the Fund's performance
somewhat over the quarter. In the international markets, we have been heavily
overweighted in finance and utilities as these sectors have better prospects
overseas than domestically.
WHAT INDUSTRIES AFFECTED THE PORTFOLIO'S PERFORMANCE THIS QUARTER?
In the past three months, we continued to profit from our exposure to technology
through convertible issues. Blue-chip technology holdings posted strong earnings
in the third quarter, despite their July correction, and propelled the market's
September rise. Specifically, a number of semiconductor companies saw
significantly improved market performance after suffering from ongoing inventory
problems in the first six months of the year. These stocks followed the lead of
PC makers, whose sales were stronger than expected.
2
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
The large-cap consumer staples holdings in the portfolio also provided a
broadly positive contribution to the Fund's performance in the quarter. However,
we view this sector as fully valued and have decreased our weighting throughout
the year. Finally, the Fund's core energy holdings contributed to the third
quarter gains, as energy stocks were particularly strong due to the current
reductions in natural gas reserves and the increases in oil prices.
WHAT INDUSTRIES PERFORMED POORLY WITHIN THE PORTFOLIO?
Electric utilities had a weak quarter due to continued industry-wide
deregulation and competitive pricing issues. We were overweighted in utilities
because they generally played an important part in meeting your Fund's income
objective this year. However, our conservative approach, which focuses on
utility stocks that distribute proportionately less of their profits but have
more stable dividends, reduced the impact of the sector's poor performance. We
also trimmed this sector's weighting somewhat over the quarter.
WHAT IS YOUR OUTLOOK?
Throughout the third quarter, we continued to purchase solid blue-chip companies
with strong dividend growth histories at the low end of their historical price
ranges. We also purchased companies with recent positive restructuring efforts
whose valuations have not caught up to their potential earnings growth
prospects. Therefore, we anticipate that the Fund's value orientation will
improve its results as the economy shows greater evidence of moderating. Until
then, we remain substantially invested, profiting from the ongoing strength of
the US equity markets.
3
<PAGE>
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SELIGMAN COMMON STOCK FUND, INC.
- --------------------------------------------------------------------------------
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS*
<TABLE>
<CAPTION>
For Periods Ended September 30, 1996 AVERAGE ANNUAL
-----------------------------------------------
CLASS B CLASS D
SINCE SINCE
INCEPTION THREE NINE ONE FIVE 10 INCEPTION
4/22/96 MONTHS MONTHS YEAR YEARS YEARS 5/3/93
------------- --------- ---------- ------ ------- ------- --------------
CLASS A
<S> <C> <C> <C> <C> <C> <C> <C>
With Sales Charge n/a (4.00)% 4.44% 8.21% 12.09% 11.99% n/a
Without Sales Charge n/a 0.81 9.67 13.58 13.18 12.54 n/a
CLASS B
With 5% CDSL (1.06)% (4.34) n/a n/a n/a n/a n/a
Without CDSL 3.94 0.66 n/a n/a n/a n/a n/a
CLASS D
With 1% CDSL n/a (0.34) 8.06 11.71 n/a n/a n/a
Without CDSL n/a 0.66 9.06 12.71 n/a n/a 11.81%
S&P 500** 6.15+ 3.09 13.50 20.33 15.23 14.95 16.99++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE
SEPTEMBER 30, 1996 JUNE 30, 1996 MARCH 31, 1996 DECEMBER 31, 1995
------------------- ------------- -------------- -----------------
<S> <C> <C> <C> <C>
CLASS A $15.00 $14.97 $14.83 $14.19
CLASS B 14.97 14.93 14.80+++ n/a
CLASS D 14.97 14.93 14.80 14.16
</TABLE>
<TABLE>
<CAPTION>
DIVIDEND AND CAPITAL GAIN INFORMATION
For the Nine Months Ended September 30, 1996
CAPITAL GAIN
-----------------------------------
DIVIDEND PAID CAPITAL GAIN PAID REALIZED UNREALIZED(0)
------------------ ---------------------- ---------- ---------------
<S> <C> <C> <C> <C>
CLASS A $0.260 $0.292 $0.829 $3.954
CLASS B 0.116*** 0.292 0.829 3.954
CLASS D 0.173 0.292 0.829 3.954
</TABALE>
- ----------
* Return figures reflect any change in price per share and assume the
reinvestment of dividends and capital gain distributions. Return figures for
Class A shares are calculated with and without the effect of the initial
4.75% maximum sales charge. Class A share returns reflect the effect of the
0.25% Administration, Shareholder Services and Distribution Plan after
January 1, 1993, only. Returns for Class B shares are calculated with and
without the effect of the maximum 5% contingent deferred sales load
("CDSL"), charged only on certain redemptions made within one year of the
date of purchase, declining to 1% in the sixth year and 0% thereafter.
Returns for Class D shares are calculated with and without the effect of the
1% CDSL, charged only on redemptions made within one year of the date of
purchase. The rates of return will vary and the principal value of an
investment will fluctuate. Shares, if redeemed, may be worth more or less
than their original cost. Past performance is not indicative of future
investment results.
** The S&P 500 is an unmanaged index that assumes reinvestment of estimated
dividends, and does not reflect fees and expenses. Investors may not invest
directly in an index.
*** For the period April 22, 1996, to September 30, 1996.
+ From April 30, 1996.
++ From April 30, 1993.
+++ As of April 22, 1996.
(0) Represents the per share amount of net unrealized appreciation of portfolio
securities as of September 30, 1996.
4
4
<PAGE>
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SELIGMAN COMMON STOCK FUND, INC.
- --------------------------------------------------------------------------------
LARGEST PORTFOLIO CHANGES
During Past Three Months
SHARES OR
PRINCIPAL AMOUNT
------------------------
HOLDINGS
ADDITIONS INCREASE 9/30/96
- ----------- ----------- -----------
COMMON STOCKS
AMP........................... 100,000shs. 150,000shs.
Caliber System................ 100,000 208,400
Central & South West.......... 250,000 250,000
Entergy....................... 100,000 250,000
PECO Energy................... 140,000 140,000
Pharmacia & Upjohn............ 125,000 125,000
Sandoz........................ 1,700 1,700
Unicom........................ 250,000 250,000
Worthington Industries........ 260,000 260,000
CONVERTIBLE BONDS
BroadBand Technologies 5%,
5/15/2001................... $3,750,000 $3,750,000
SHARES
------------------------
HOLDINGS
REDUCTIONS DECREASE 9/30/96
- ------------- ----------- -----------
COMMON STOCKS
American Stores............... 171,000 --
American Telephone &
Telegraph................... 75,000 --
Anadarko Petroleum............ 100,000 --
Carolina Power and Light...... 200,000 --
Edison International.......... 400,000 --
FPL Group..................... 160,000 --
Knight-Ridder................. 100,000 100,000
Mallinckrodt Group............ 100,000 --
Schweitzer-Mauduit International 140,000 --
Unifi......................... 175,000 --
Largest portfolio changes from previous quarter to current quarter are based on
cost of purchases and proceeds from sales of securities.
MAJOR PORTFOLIO HOLDINGS
At September 30, 1996
SECURITY VALUE
- --------- ----------
General Electric........................ $13,650,000
Royal Dutch Petroleum................... 10,148,125
American International Group............ 10,075,000
Procter & Gamble........................ 9,750,000
Omnicom Group........................... 9,350,000
Schering-Plough......................... 9,225,000
Sara Lee................................ 8,937,500
Bank of New York........................ 8,812,500
General Signal.......................... 8,800,000
Colgate-Palmolive....................... 8,687,500
PORTFOLIO COMPOSITION
At September 30, 1996
[The following table represents a pie chart in the printed piece]
Common Stocks 82.9%
Short-Term Holdings and Other 8.6%
Convertible Bonds 5.9%
Convertible Preferred Stocks 2.6%
5
<PAGE>
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PORTFOLIO OF INVESTMENTS (unaudited)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
COMMON STOCKS 82.9%
ADVERTISING 1.3%
Omnicom Group................ 200,000 $ 9,350,000
-------------
AEROSPACE/DEFENSE 2.0%
General Dynamics............. 50,000 3,443,750
General Motors (Class H)..... 75,000 4,331,250
United Technologies.......... 50,000 6,006,250
-------------
13,781,250
-------------
APPAREL AND TEXTILES 0.8%
Liz Claiborne................ 150,000 5,587,500
-------------
AUTOMOTIVE AND
RELATED 1.9%
Autoliv (ADRs)*+............. 20,000 870,000
Echlin....................... 200,000 6,275,000
Genuine Parts................ 100,000 4,375,000
Volkswagen................... 19,000 1,417,588
-------------
12,937,588
-------------
CHEMICALS 2.0%
Bayer........................ 76,000 2,776,957
Dow Chemical................. 100,000 8,025,000
Olin......................... 40,000 3,360,000
-------------
14,161,957
-------------
CONSTRUCTION 0.7%
Sherwin-Williams............. 100,000 4,637,500
-------------
CONSUMER GOODS AND
SERVICES 8.8%
Adidas....................... 13,646 1,243,840
Allied Domecq................ 230,000 1,616,950
Christian Dior............... 10,000 1,169,681
Coca-Cola.................... 150,000 7,631,250
Colgate-Palmolive............ 100,000 8,687,500
Eastman Kodak................ 100,000 7,850,000
First Brands................. 200,000 5,225,000
Gillette..................... 50,000 3,606,250
International Flavors &
Fragrances................ 100,000 4,362,500
PepsiCo...................... 200,000 5,650,000
Procter & Gamble............. 100,000 9,750,000
Rubbermaid................... 185,000 4,532,500
-------------
61,325,471
-------------
DRUGS AND HEALTH
CARE 5.2%
Abbott Laboratories.......... 75,000 3,693,750
American Home Products....... 60,000 3,825,000
Bard (C.R.).................. 150,000 4,668,750
Baxter International......... 80,000 3,740,000
Bristol-Myers Squibb......... 40,000 3,855,000
Pharmacia & Upjohn........... 125,000 5,156,250
Sandoz....................... 1,700 2,041,627
Schering-Plough.............. 150,000 9,225,000
-------------
36,205,377
-------------
ELECTRIC AND GAS
UTILITIES 6.7%
Central & South West......... 250,000 6,500,000
CINergy...................... 250,000 7,718,750
Empresa Nacional de
Electricidad (ADRs)....... 50,000 2,968,750
Entergy...................... 250,000 6,750,000
Hong Kong Electric........... 1,800,000 5,819,216
PECO Energy.................. 140,000 3,325,000
Unicom....................... 250,000 6,281,250
VEBA......................... 45,000 2,358,372
Williams Cos................. 100,000 5,100,000
-------------
46,821,338
-------------
ELECTRONICS 0.7%
Motorola..................... 100,000 5,162,500
-------------
ENERGY 7.1%
Atlantic Richfield........... 50,000 6,375,000
Enron........................ 150,000 6,112,500
Mobil........................ 50,000 5,787,500
PanEnergy.................... 200,000 6,925,000
Royal Dutch Petroleum........ 65,000 10,148,125
Schlumberger................. 75,000 6,337,500
Texaco....................... 70,000 6,440,000
Total S.A. (Class B)......... 15,396 1,211,990
-------------
49,337,615
-------------
ENVIRONMENTAL
SERVICES 0.4%
Browning-Ferris Industries... 100,000 2,500,000
-------------
- ------------------------
See footnotes on page 9.
6
<PAGE>
================================================================================
September 30, 1996
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
FINANCE AND
INSURANCE 13.2%
Ahmanson (H.F.).............. 150,000 $ 4,200,000
American International Group. 100,000 10,075,000
Aon.......................... 100,000 5,425,000
AXA.......................... 20,045 1,201,039
Banco de Santander (ADSs).... 50,000 2,599,829
Bank of New York............. 300,000 8,812,500
Bankers Trust................ 100,000 7,862,500
Citicorp..................... 50,000 4,531,250
Federal National Mortgage
Association............... 200,000 6,975,000
Fleet Financial Group........ 150,000 6,675,000
General Re................... 50,000 7,087,500
Great Western Financial...... 200,000 5,300,000
Grupo Financiero Banamex
Accival (Class B)......... 551,000 1,195,221
Household International...... 50,000 4,112,500
HSBC Holdings................ 50,000 927,842
ING Groep.................... 100,636 3,142,117
Irish Life................... 380,000 1,526,136
Mellon Bank.................. 70,000 4,147,500
National Australia Bank (ADRs) 50,000 2,643,750
St. Paul Companies........... 60,000 3,330,000
-------------
91,769,684
-------------
FOOD 5.8%
Campbell Soup................ 100,000 7,800,000
ConAgra...................... 150,000 7,387,500
CPC International............ 100,000 7,487,500
General Mills................ 100,000 6,037,500
Sara Lee..................... 250,000 8,937,500
Sysco........................ 100,000 3,362,500
-------------
41,012,500
-------------
INDUSTRIAL EQUIPMENT 5.9%
AMP.......................... 150,000 5,812,500
BTR.......................... 320,000 1,355,313
Cooper Industries............ 75,000 3,243,750
Emerson Electric............. 50,000 4,506,250
General Electric............. 150,000 13,650,000
General Signal............... 200,000 8,800,000
Mannesmann................... 4,000 1,499,853
Pacific Dunlop............... 1,100,000 2,280,383
-------------
41,148,049
-------------
LEISURE AND
ENTERTAINMENT 0.2%
Mandarin Oriental............ 300,000 $ 444,000
Television Broadcast......... 300,000 1,115,350
-------------
1,559,350
-------------
METALS AND MINING 0.4%
Reynolds Metals.............. 50,000 2,556,250
-------------
OFFICE EQUIPMENT 1.1%
Pitney Bowes................. 150,000 7,893,750
-------------
PAPER AND PACKAGING 1.8%
International Paper.......... 175,000 7,437,500
Kimberly-Clark............... 50,000 4,406,250
Stora Kopparbergs (Class B).. 80,000 1,019,769
-------------
12,863,519
-------------
PRINTING AND PUBLISHING 2.5%
Donnelley (R.R.)............. 100,000 3,225,000
Elsevier..................... 130,000 2,151,085
Knight-Ridder ............... 100,000 3,700,000
Reader's Digest (Class A).... 100,000 4,087,500
Tribune...................... 50,000 3,900,000
-------------
17,063,585
-------------
RESTAURANTS 0.5%
McDonald's................... 80,000 3,790,000
-------------
RETAIL TRADE 2.7%
May Department Stores........ 100,000 4,862,500
Sears, Roebuck............... 100,000 4,475,000
Tesco........................ 184,600 877,229
Wal-Mart..................... 200,000 5,275,000
Woolworth.................... 150,000 3,093,750
-------------
18,583,479
-------------
STEEL 1.3%
Nucor........................ 60,000 3,045,000
Pohang Iron & Steel (ADRs)... 40,000 855,000
Worthington Industries....... 260,000 5,248,750
-------------
9,148,750
-------------
TELECOMMUNICATIONS 1.2%
Alcatel Alsthom.............. 17,000 1,433,731
Frontier..................... 150,000 3,993,750
Indosat (ADRs)............... 13,100 432,300
Olivetti..................... 651,000 238,492
Tele Danmark (ADSs).......... 70,000 1,653,750
Telecom Italia-Di Risp....... 585,000 725,899
-------------
8,477,922
-------------
- ------------------------
See footnotes on page 9.
7
<PAGE>
================================================================================
PORTFOLIO OF INVESTMENTS (unaudited) (continued)
- --------------------------------------------------------------------------------
SHARES OR
PRIN. AMT. VALUE
---------- -----
TELEPHONE UTILITIES 2.8%
ALLTEL....................... 250,000shs. $ 6,968,750
NYNEX........................ 75,000 3,262,500
SBC Communications........... 75,000 3,609,375
U.S. West.................... 200,000 5,950,000
-------------
19,790,625
-------------
TOBACCO 2.0%
B.A.T. Industries............ 200,000 1,332,453
Philip Morris................ 75,000 6,731,250
UST Inc...................... 200,000 5,925,000
-------------
13,988,703
-------------
TRANSPORTATION 1.4%
British Airways (ADRs)....... 21,000 1,730,400
Caliber System............... 208,400 3,360,450
Conrail...................... 50,000 3,618,750
Jurong Shipyard.............. 150,000 729,759
-------------
9,439,359
-------------
MISCELLANEOUS/
DIVERSIFIED 2.5%
Corning (Delaware)........... 200,000 7,800,000
Minnesota Mining &
Manufacturing............. 50,000 3,493,750
Tenneco...................... 119,500 5,989,938
-------------
17,283,688
-------------
TOTAL COMMON STOCKS
(Cost $400,090,681) ...... 578,177,309
-------------
CONVERTIBLE BONDS 5.9%
INSURANCE 0.2%
Liblife International 6 1/2%,
9/30/2004................. $1,000,000 1,307,500
-------------
LEISURE AND RELATED 0.3%
Bell Sports 4 1/4%, 11/15/2000 2,500,000 1,909,375
-------------
RETAIL TRADE 1.1%
The Pep Boys 4%, 9/1/2001.... 5,000,000 5,281,250
Price 6 3/4%, 3/1/2001....... 2,000,000 2,110,000
-------------
7,391,250
-------------
TECHNOLOGY 1.9%
Bay Networks 5 1/4%,5/15/2003+ 3,500,000 3,342,500
BroadBand Technologies 5%,
5/15/2001+................ 3,750,000 3,075,000
Conner Peripherals 6 1/2%,
3/1/2002.................. 2,000,000 2,285,000
Data General 7 3/4%, 6/1/2001 3,000,000 2,985,000
Xilinx 5 1/4%, 11/1/2002+.... 2,000,000 1,940,000
-------------
13,627,500
-------------
TRANSPORTATION 0.2%
Nippon Yusen 2%, 9/29/2000...140,000,000** 1,438,283
-------------
MISCELLANEOUS/
DIVERSIFIED 2.2%
MascoTech 4 1/2%, 12/15/2003. $3,000,000 2,302,500
Teco Electric & Machinery 2 3/4%,
4/15/2004................. 1,500,000 1,170,000
Thermo Electron 5%, 4/15/2001+ 3,000,000 5,550,000
TNT Pacific Finance 9%,
7/27/1998................. 5,000,000++ 3,926,578
TriMas 5%, 8/1/2003.......... $2,000,000 2,210,000
-------------
15,159,078
-------------
TOTAL CONVERTIBLE BONDS
(Cost $35,234,982) ....... 40,832,986
-------------
CONVERTIBLE PREFERRED STOCKS 2.6%
INSURANCE 0.7%
Alexander & Alexander
(Series A) $3.625+........ 100,000 shs. 4,637,500
-------------
PAPER 0.3%
International Paper $4.00+... 40,000 1,920,000
-------------
RETAIL TRADE 0.5%
Kmart Financing 7 3/4%....... 75,000 3,665,625
-------------
TELECOMMUNICATIONS 0.2%
Mobile Telecommunication
Technologies $2.25+....... 75,000 1,790,625
-------------
- ----------
See footnotes on page 9.
8
<PAGE>
================================================================================
September 30, 1996
- --------------------------------------------------------------------------------
SHARES OR
PRIN. AMT. VALUE
---------- -----
TRANSPORTATION 0.9%
GATX $3.875.................. 70,000shs. $ 3,990,000
Sea Containers $4.00......... 50,000 2,362,500
-------------
6,352,500
-------------
TOTAL CONVERTIBLE
PREFERRED STOCKS
(Cost $18,115,852) ....... 18,366,250
-------------
SHORT-TERM HOLDINGS 8.2%
National Westminster Bank,
Nassau, Fixed Time Deposit,
5 3/4%, 10/1/1996..........$28,710,000 28,710,000
Union Bank of Switzerland,
Grand Cayman, Fixed
Time Deposit,
5 3/8%, 10/1/1996......... 28,710,000 28,710,000
-------------
TOTAL SHORT-TERM
HOLDINGS
(Cost $57,420,000) .................. 57,420,000
-------------
TOTAL INVESTMENTS 99.6%
(Cost $510,861,515) ................. 694,796,545
OTHER ASSETS LESS
LIABILITIES 0.4% ................... 2,858,592
-------------
NET ASSETS 100.0% ...................... $697,655,137
=============
- ----------
* Non-income producing security.
** Principal amount reported in Japanese yen.
+ Rule 144A security.
++ Principal amount reported in Australian dollars.
Note: Investments in common stocks and convertible securities are valued at
current market values or, in their absence, at fair values determined in
accordance with procedures approved by the Board of Directors. Securities traded
on national exchanges are valued at last sales price or, in their absence and in
the case of over-the-counter securities, a mean of bid and asked prices. Short-
term holdings maturing in 60 days or less are valued at amortized cost.
9
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</TABLE>
